Capital Goods - December 2010

Which way will the GOP go?

By Scott Mooneyham

Wine glass in hand, retail mogul Art Pope mingled with other GOP insiders, candidates and well-wishers gathered at the downtown Raleigh Marriott to bask in Election Night victory. For the first time in more than a century, Republicans had won majorities in both chambers of the General Assembly, and finding a frown in the place was about as easy as getting a cable-TV pundit to shut up.

Pope, whose Variety Wholesalers Inc. owns, among other chains, Rose’s, Maxway and Super Dollar, had been accused by some Democrats of mounting a one-man effort to buy the election. Groups tied to the Raleigh businessman had put $2.1 million toward unseating Democratic incumbents. To Pope’s critics, this was exactly the kind of corrosive corporate money that had been predicted to flow into political campaigns now that the U.S. Supreme Court had let loose the floodgates with its decision that blurred distinctions between individual and company.

But in the ballroom and out in the halls, Big Business was noticeably absent. No more than four or five business lobbyists made it to the shindig. It’s not that they and their corporate clients were caught off-guard by the Republican rout. They had spread their money around this time, to Republicans and Democrats, knowing what was in the wind. Groups such as the North Carolina Chamber of Commerce and the state chapter of the National Federation of Independent Businesses endorsed Republicans in key races. Chamber officials privately toyed with working against Democratic Rep. Jennifer Weiss of Wake County, a House Finance Committee co-chair and a top lieutenant of House Speaker Joe Hackney.

The idea of a Republican legislature less friendly to regulation appealed to a broad range of business interests. Still, the lobbying establishment in Raleigh was accustomed to Democratic rule, the majority of them steeped in Democratic, not Republican, party politics. With the GOP set to take control of the state House and Senate in January, that alignment will be one of the first things to change in Raleigh. Lobbyists will either shore up their relationships with Republican legislators or lobbying firms will add Republican insiders to their rosters.

The changes won’t stop there. This new Republican majority will have a very different relationship with Gov. Beverly Perdue than that of her old Democratic colleagues in the legislature. For the first time since North Carolinians gave their governor veto power, a governor of one party will face a unified legislative majority of the other party. A day after the election, Perdue didn’t sound as if she was looking for a fight, not with the state facing a $3 billion budget gap next year. “Budget cuts are never easy. Everyone’s got skin in the game,” she told reporters. Legislative Republicans were equally conciliatory. “This isn’t something that one party solves,” says state Rep. Thom Tillis, a Mecklenburg County Republican considered one of the favorites to become the next House speaker.

Maybe not. But it is the kind of thing that two parties butt heads over, especially when one is more prone to embracing tax hikes than the other. Tillis and his fellow House Republicans wasted no time reiterating their pledge to cut — and not tax — their way out of the state’s financial hole. They know living up to that promise won’t be easy. It’s why Republicans whined so loud and long last summer when Democrats passed a $19 billion budget that put off the tougher decisions for another year. Legislative Republicans also say they want to lower some tax rates to be more competitive with other Southeastern states. Want to and will do are two different things. They’ll soon see how lengthy is the list of programs and people — many of them private-sector businesses such as home-health companies — who ultimately depend on the taxpayer’s dime for their economic survival.

Another potential speaker of the House, Raleigh lawyer Paul “Skip” Stam, says his party will rule from the middle. It’s another claim that is easy to make now. For Republicans to make their success last more than a term or two, they’ll have to keep members of their caucus from wandering into the mire that some social-conservative causes can become.

Pope, in many respects, is a social conservative, so he may not care. But Republicans didn’t finally match Democratic fundraising success with his help alone. The executives and political-action committees of banks, utility companies and manufacturers spent campaign money on Republicans and moderate Jim Hunt Democrats. The money was following momentum. It also went to a GOP leadership that seems steady and solid. Soon enough, we’ll see how solid.